Daily analysis

Gold Price Forecast: XAU/USD bears reclaimed the 100-DMA and targets the 200-DMA at around $1835

Gold spot (XAU/USD) slid below the 100-day moving average (DMA) at $1881.38 and recorded a daily close nearby on Monday, ahead of Wednesday’s Federal Reserve monetary policy decision, widely expected to hike rates by 50-bps, amid a scenario of high global inflation, courtesy of the Ukraine-Russia war, alongside an ongoing Covid-19 crisis in China, which threatens to disrupt the supply chain. At $1868.09, the yellow metal records minimal gains of 0.01%.

Sentiment in the financial markets is positive, as shown by gains in US equities amidst a choppy trading session ahead of the FOMC’s meeting. Asian futures are set to open higher while crude oil prices fell, a lid on precious metals gains.

The US Dollar Index fell for the second time in the last four days but clings to the 103 mark, at 103.455, registering a loss of 0.14%. Additionally, US Treasury yields dropped, led by the 10-year benchmark note, which sat at 2.979%, and fell two basis points, undermining the greenback.

On Tuesday, the Fed’s May meeting began. Furthermore, the US economic docket featured US Factory Orders for March, which grew by 2.2% m/m, beating the 1.1% foreseen. In the meantime, US JOLTs Job Openings for March rose to 11.549M, worst than the 11M estimations, illustrating a tight US labor market.

Despite mixed US data, the Federal Reserve is expected to lift rates by 50-bps on Wednesday and could begin reducing its balance sheet by $95 billion. Still, money market futures have also priced in additional 50-bps increases in June, July, and September meetings, which means that the Federal Funds Rate would be lying at the 2.25-2.50% range around that time.

Gold Price Forecast (XAU/USD): Technical outlook
The XAU/USD’s daily chart depicts the yellow metal as neutral biased. Furthermore, XAU/USD bears achieved a daily close below the 100-day moving average (DMA), lying at $1881.38, paving the way for XAU/USD’s further losses.

On the downside, gold’s first support would be the 200-DMA at $1835.08. A break below would expose an upslope trendline around $1810-15, followed by a renewed test of $1800.

Upwards, XAU/USD’s first resistance would be the 100-DMA at $1881.38. A breach of the latter would expose $1890, followed by $1900, and then April’s 29 daily high at $1919.77.

Reference by: Investing.com